A young man and budding photographer that I met a couple of years ago called me this afternoon with a question on how to price his work. It’s a great question, especially in today’s economy and I’m not sure I did a very good job of explaining things in the few minutes that we spoke. It’s also a question that comes up frequently during my workshops and speaking engagements.
I’m sorry to say that in business (any business) the value of the product or service you provide and the price you can charge has absolutely nothing to do with how much effort you put into creating that product or providing that service. If it did, we would all be millionaires.
Let me repeat that for those of you thinking you’ve misunderstood me.
The value of the product or service that you provide and the price you can charge has absolutely nothing to do with how much effort you put into creating that product or service.
Experienced sales and marketing people from around the globe will read this simple sentence and nod quietly in agreement but folks that make things (creative professionals in any industry) seem to have the most trouble understanding this concept. Right now I’ll bet you’re thinking “Wow, Jeff is off his rocker today” and “what the hell do you mean that my efforts have nothing to do with the value of my work”, but hear me out before you pass judgement.
Question: If the value (price) of your product or service is not determined by the effort (cost) it took to create it, then what determines the price you can charge?
The short answer is “You do. Only you.” and no, I’m not joking.
The long answer is that you determine the price and your customer determines if the value of your work is worth the price. This dynamic hasn’t changed one bit since the beginning of human history and it never will. Even before money was invented, people used the barter system to determine value and price. It’s pretty much a natural law.
The good news is that the sky’s the limit and when times are good, many creative professionals (in many industries) make a healthy living if they are smart and frugal. The bad news is when times are bad, many creative professionals find themselves unable to make enough profit to cover their expenses.
My pricing formula is very simple and straight-forward. I do not give away my work, no matter how bad the economy is doing. When folks contact me about buying the rights to an image, doing product photography or (heavens forbid) shooting a senior portrait, I will almost always ask a simple question, “What’s your budget?“.
Almost everyone I’ve ever done work for in engineering or photography has an idea of what they want to spend on a project and this simple question cuts right to the heart of the matter. However, in today’s economic climate I am very (VERY) aware of how little extra cash most small (and really small) companies have to spend on photography and I will always try to find a way to a “price” that works for both of us.
For example, I’ve recently started shooting interiors, exteriors and surrounding areas for B&B’s (bed & breakfast inns) in the Texas Hill Country. Most of these are mom & pop operated small businesses looking to make some extra cash on the weekends. These folks generally advertise their places on the Internet and use their web site as an online reservation system. There are several really nice software packages available (hosted) that provide a template that the owners fill in with text and photographs.
Some B&B’s do a great job with their images but many just take their own snapshots and post them up “as is” with no color correction, using the wrong resolution, etc. Nothing drives away potential customers as fast as poor photography of the interior and exterior of a Bed & Breakfast. I’ll post later about my interior lighting setups (stolen from David Hobby) and exterior natural light shots (Two words: Tilt & Shift).
What I offer them is a much higher quality set of images that they can use royalty free for a very reasonable and very negotiable price. In fact, there are a few that I work for that pay me in “trade” (room & board) when I’m traveling through the area. They get some really nice images for their web site and brochures and I get a comfortable bed and a hot meal during my travels. This barter system also extends to some of the small town restaurants I frequent in my travels. And since these folks get to see me more often and get to know me better, when the economy turns around I’ll be positioned to get any new photographic work they need done.
One thought to leave you with. Selling your product or service “for nothing” sets a very dangerous precedent that will come back to bite you when the economy picks up (yes, it really will get better). Once you’ve given away your “work”, that customer knows just how low you are willing to go to land the job. In boxing that’s called “telegraphing your punches” and it usually ends up with you getting the #$%^& beat out of you.
So, the next time your back is against the wall negotiating a price, be brave and ask “what’s your budget?”. Be willing to walk away from “free” but keep the idea of “trade” (barter) in the back of your head. I think you’ll be surprised how many jobs you can land.